Most of the dead were poor manual labourers, rickshaw pullers and hawkers who drank the “country liquor” at a series of makeshift bars all supplied by the same illicit distillery in the town of Mograhat, 30 miles south of the state capital, Kolkata. The death toll is expected to rise, officials said on Thursday night.

Mamata Banerjee, the chief minister of West Bengal, said: “Consumption of illicit liquor is a social disease” which “has to be eradicated.”

“I want to take strong action against those manufacturing and selling illegal liquor,” she said, according to the Press Trust of India. “But this is a social problem also, and this has to be dealt with socially also.”

Crowds of relatives assembled outside the local hospital where hundreds of casualties were being treated on Thursday. Inside, dozens of bodies had been lined up on the concrete floor covered in blankets.

Medical and mortuary facilities were overwhelmed, doctors said. Incidents of alcohol poisoning are frequent in India where local police and inspectors regularly take bribes to turn a blind eye to the production and sale of illicit spirits, though few operations are on such a large scale. Most go unreported.

Seven people have been arrested and 10 illegal shops selling alcohol have been demolished in Mograhat, officials said.

Angry locals were reported to have destroyed the distillery blamed for the tragedy. Its owner is on the run.

Mograhat residents said one shop was opposite a police station but had been trading openly. Anwar Hassan Mulla, who brought six casualties to hospital, told NDTV news channel that he blamed police. “It’s a very sad thing that this has happened,” Mulla said. “Why don’t the police stop this? I cannot understand. What connection do they have (to the bootleggers)?” All those Mulla brought to hospital died.

A litre of local spirit costs 10 rupees (13p), residents said. A manual labourer in India usually earns around 150 rupees (£1.95) for a day’s work.

Moonshine, spiked with a variety of chemicals, is often sold door-to-door by salesmen on bicycles. “I had purchased two half-litre pouches for 10 rupees while returning home last evening and drank the liquor before dinner. After midnight, I felt a pain in my throat. Then I started vomiting,” Julfikar Saddar, 35, told the Calcutta Telegraph newspaper from his hospital bed.

Despite religious and cultural taboos against drinking among Indians, an estimated 5% of the 1.21 billion population are dependent on alcohol. Two-thirds of the alcohol consumed in the country is illegal hooch made in remote villages or smuggled liquor, according to The Lancet medical journal.

Dr Abdul Abdus, a health worker based in Mograhat, said the spirit locally was made from old sugar and was sold door to door. “The women work in the cities as maids and earn the money. The husbands drink it. Social problems such as domestic abuse often result,” Abdus told the Guardian.

The state of Gujarat, where alcoholic drinks are banned, recently approved the death penalty for making, transporting or selling illicit liquor that leads to death. The strict measures were introduced after 157 people died in the city of Ahmedabad in 2009. At least 180 people died in 2008 around the southern Indian city of Bangalore from a toxic batch of homemade spirits.

However, illicit liquor is a hugely profitable industry across India, where bootleggers pay no taxes and sell enormous quantities of their product, according to Johnson Edayaranmula, executive director of the Indian Alcohol Policy Alliance, an organisation that fights alcohol-related problems. Every week, one or two people across the country die from tainted liquor, he said. Basic legal spirits – known as “country liquor” – are barely less dangerous. In the state of Punjab, one of India’s wealthiest, up to three quarters of young men are dependent on alcohol or drugs, prompting local communities to call, unsuccessfully for tighter regulations. Alcohol abuse in the southern state of Kerala is also extremely high.

The state of West Bengal is one of the poorest in India. Earlier this week a fire in a hospital killed 93 people in the state capital of Kolkata (formerly Calcutta). It is believed to have started in a carpark under an annex which was being use as a store in breach of local regulations. The incident underlined the patchy rule of law in India where health and safety rules are rarely observed.